Possible market entry of a firm with an additive manufacturing technology

One of the principle characteristics of additive manufacturing is that customers get access to their own design, i.e., they need not choose from a small number of standard products. The paper considers a framework where an incumbent with a standard technology produces a limited number of standard products, and faces a potential entrant with an additive manufacturing technology. We find that three different outcomes are possible: the incumbent accommodates entry while producing just one product, blockades/deters entry, or it has to leave the market due to too heavy competition from the entrant. We give conditions under which each of these outcomes will occur.